Research and development expenses nearly doubled to $5.2 million in the second quarter of 2001 as compared to $2.7 million in the second quarter of 2000 and for the six months ended June 30, 2001 research and development expenses increased by $4.0 million to $9.1 million from $5.1 million for the six months ended June 30, 2000.
Cash and cash equivalents totaled $222.9 million at June 30, 2001 and reflect the net proceeds from the Company's secondary offering that was completed in June 2001. Cash and cash equivalents at June 30, 2001 do not include the net proceeds of approximately $19.5 million related to the underwriters' exercising their over-allotment option on the Company's secondary offering in late June 2001. The Company received the over-allotment proceeds on July 2, 2001.
"Arena initiated Project Genesis as a defined internal research focus early this year. We believe that we are making significant progress toward our Project Genesis goals of acquisition, mapping, and completion of medicinal discovery at all G-coupled protein receptor targets. We believe that this significant scientific undertaking is important for Arena's long term success and growth," said Jack Lief, President and CEO. "I am very pleased that in a very tough financial market, we were able to complete our secondary offering, and I believe that a significant component of the success of our offering was based upon the positive reception that Project Genesis has received. We expect that the information that we are developing from Project Genesis will significantly help to both enhance the value of our CART Technology deals and to provide us with the ability to select interesting and lucrative targets for our own internal drug development. We believe Arena's performance during the first half of this year is on track to deliver both positive earnings for the entire year as well as the discovery of new and exciting drug leads."
Arena's CART Technology allows for the direct identification of modulators of G protein-coupled receptors in a ligand-independent manner, making the technology particularly useful with respect to orphan GPCRs, which are estimated to comprise approximately 2% of the human genome. Such ligand-independent screening is made possible by genetic alteration of these receptors, using routinely applicable and proprietary genetic cassettes. Arena has initiated "Project Genesis," an internal program aimed at obtaining all of the human GPCRs, identifying the location of these receptors within normal and diseased tissue of the human body for purposes of understanding the function of such receptors, and screening each GPCR to identify receptor modulators that form the basis of drug candidates. Arena's CART Technology, in conjunction with Arena's recent acquisition of the Melanophore Technology, is intended to facilitate completion of Project Genesis within the next three to five years. Arena is using the Melanophore Technology in combination with its CART Technology for internal drug discovery purposes. Through BRL Screening, Inc. (BRL), Arena intends to also license the Melanophore Technology to biotechnology and pharmaceutical organizations.
Certain statements in this press release are forward-looking statements that involve a number of risks and uncertainties, and actual events or results may differ materially from Arena and BRL expectations. Important factors that could cause actual results to differ materially from those stated or implied by Arena's and BRL's forward looking statements due to risks and uncertainties associated with Arena's and BRL's business include, but are not limited to, the following: future quarterly or annual financial results; the timing, success and cost of preclinical research, out-licensing endeavors and clinical studies, and receipt of additional milestone payments, if any, from collaborators. Additional risk factors that could cause actual results to differ materially from those in Arena's or BRL's forward looking statements are disclosed in Arena's SEC reports, including, but not limited to, Arena's registration statement filed June 21, 2001 on Form S-1, as amended, its most recent quarterly report on Form 10-Q and its 2000 annual report on Form 10-K. These forward-looking statements represent Arena's judgment as of the date of this release. Arena and BRL each disclaim, however, any intent or obligation to update these forward-looking statements.
Arena Pharmaceuticals, Inc. Condensed Consolidated Statements of Operations Three months ended Six months ended June 30, June 30, 2001 2000 2001 2000 (unaudited) (unaudited) (unaudited) (unaudited) Revenues Total revenues $3,330,255 $1,289,271 $8,722,590 $1,289,271 Expenses Research and development 5,241,523 2,681,630 9,144,864 5,080,987 General and administrative 1,331,573 495,671 2,357,556 919,500 Amortization of non-cash deferred compensation 1,072,731 1,419,565 2,341,397 1,829,044 Amortization of acquired technology and other purchased intangibles 384,249 -- 512,332 -- Total expenses 8,030,076 4,596,866 14,356,149 7,829,531 Interest and other income, net 1,554,141 421,513 3,572,873 531,978 Net loss (3,145,680) (2,886,082) (2,060,686) (6,008,282) Non-cash preferred stock charge -- (8,203,505) -- (22,391,068) Net loss applicable to common stockholders $(3,145,680) $(11,089,587) $(2,060,686) $(28,399,350) Net loss per share, basic and diluted $(0.14) $(8.47) $(0.09) $(23.70) Shares used in calculating net loss per share, basic and diluted 22,819,360 1,309,968 22,556,573 1,198,238 Pro forma net loss per share $(0.81) $(2.43) Shares used in calculating pro forma net loss per share 13,761,385 11,695,092 Note: The loss per share on a pro forma basis assumes the conversion of the redeemable preferred stock into common stock as of the date of issuance. The redeemable preferred stock converted into common stock at the closing of the Company's initial public offering on a one-for-one basis. Condensed Consolidated June 30, December 31, Balance Sheet Data: 2001 2000 (unaudited) Assets Cash and cash equivalents $222,927,441 $144,413,176 Proceeds due from over-allotment exercise 19,545,000 -- Other current assets 4,576,238 3,801,268 Property and equipment, net 13,248,698 4,265,260 Acquired technology and other assets 16,974,319 232,225 Total assets $277,271,696 $152,711,929 Liabilities and Stockholders' Equity Liabilities 5,089,786 3,927,604 Stockholders' equity 272,181,910 148,784,325 Total liabilities and stockholders' equity $277,271,696 $152,711,929"Arena Pharmaceuticals" and the corporate logo are registered U.S. trademarks of the Company. "Arena," "CART" and "BRL Screening" are trademarks of the Company. Arena's headquarters are located at 6166 Nancy Ridge Drive, San Diego, CA 92121. On the Internet, please refer to the Investor Relations Center at Arena's website: http://www.arenapharm.com for further information.
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CONTACT: Jack Lief, President & CEO, ext. 223, or Joseph Mooney, CFO, ext. 508, of Arena Pharmaceuticals, Inc., +1-858-453-7200